Calculating Conversion Rate: How it Works

1. What is a conversion rate?
2. Why should the conversion rate be calculated?
3. Conversion Rate: Formula and Sample Calculation
4. Which period should you consider for the assessment of the Conversion Rate?
5. What role does the conversion rate play in lead management?
6. How can you improve your conversion rate?
7. What tools are suitable for calculating the Conversion Rate?
8. Conclusion: If you know your conversion rates, (almost) nothing can go wrong!

Do you practice online marketing by feel? If you've had enough of the uncertainty, we'll show you here how to analyze and measure your initiatives. What the conversion rate is, how to calculate it, and what conclusions you can draw from it, you'll find out in this article.

What is a conversion rate?

Source: nic.hamburg

The Conversion Rate (CR) is an important Key Performance Indicator (KPI) in online marketing and lead management. It compares the number of website visitors with the conversions (e.g. purchases, newsletter subscriptions or downloads). The classic in e-commerce is the number of purchases in the online store (in percent). Conversions are divided into two categories: Macro-Conversions (e.g. purchases) and Micro-Conversions (e.g. shopping carts). In order for the success of a website (based on the CR) to be analyzed, the conversion goals must be clearly formulated. For measurement and evaluation, companies use analytic or SEO tools. The conversion rate thus forms the basis for all optimization measures. These usually concern the UX strategy in terms of user friendliness, functionality, design or loading time.

What can you calculate with the conversion rate?

Conversions always represent a transformation: e.g. from visitors to leads or from leads to customers. A conversion signals interest through a proactive step by your visitors. These are typical conversions:

• Purchases
• completed forms (e.g. contact form)
• Calls
• Newsletter subscriptions
• Registrations
• Downloads (e.g. white papers)
• submitted reviews

Why should the conversion rate be calculated?

Anyone who wants to get the most out of their resource input should keep an eye on their conversion rates. Although stiff sales goals and limited marketing budgets may encourage the calculation of the CR. But in general, every company should be interested in knowing its most effective advertising measures and lead generation channels. Only in this way can you use your budget effectively.

The biggest advantages of CR calculation include:

• improving customer satisfaction and loyalty
• identification of uneconomical advertising costs
• personalized audience targeting
• increasing efficiency
• increasing revenues
• optimizing your marketing campaigns and your ROI (Return of Invest)
• prioritizing your marketing initiatives

Conversion Rate: Formula and Sample Calculation

You calculate the Conversion Rate by dividing the number of conversions by the number of total website visitors. Let's say you achieved 57 newsletter subscriptions. In total, 1,027 people visited your website.

Formula for Conversion Rate calculation:

Source: Advantage

In our example we divide 57 conversions by 1,027 visitors-. This would give our CR 5.6 percent.

57 Conversions * 100 / 1,027 website visitors = 5.6 percent

Where should your Conversion Rate be?

This question cannot be answered generically. A Visits to Leads Conversion Rate of 1 to 5 percent is considered positive. Typically, e-commerce companies in the B2C sector have a Conversion Rate of 1 percent. Or in other words: Every 100th visitor places an order. Particularly successful online stores enjoy a conversion rate of 10 percent. Thus, every 10th visitor buys a product in their store. A Leads to Customer Conversion Rate from 1 to 20 is in the green zone.

The Conversion Rate also depends on the product. FMCG articles and other cheap products are bought much more often than expensive luxury items. There are also large industry differences: the average Conversion Rate for electronics is 1.6 percent, while the health and wellness category is at 6.7 percent (Source: Statista). In B2B, the average Conversion Rate is somewhat higher than in B2C.

What affects the Conversion Rate?

Seasonal fluctuations can also affect your conversion rate. If you sell Christmas, Halloween or Carnival items, for example, your conversion rate will never remain constant throughout the year, no matter how much heart and soul you put into your optimization.

The Conversion Rate is influenced, among other things, by these factors:

• Price
• Season
• Reliability (e.g. security certificates, texts/translations)
• Technology (e.g. forwarding to PayPal)
• Payment options
• Delivery times
• Registration, login and order process
• Call to Actions
• Branch
• Design of the website or landing page
• Responsive design (mobile optimization)
• Misleading SEA (ad can't deliver what it promises)

Which period should you consider for the assessment of the Conversion Rate?

The timeframe can also not be generalized. As a rule of thumb, one month is considered appropriate. You should consider the following factors when determining the timeframe.

• Short enough: Choose as short a period as possible in order to analyze individual phases. In tourism, for example, there are classic 'up and downs'. Due to early bird discounts, the conversion rate will fluctuate. Observe and compare the individual phases, not the whole business year.
• Long enough: Choose as long a period as possible so that short-term fluctuations do not distort the picture. Daily evaluations would make little sense, for example, as weekdays and weekends inevitably yield different results.
• Relaunches: If you have made changes to your homepage, you should either evaluate the period before or after. Choosing a period that covers both versions gives no clear information.
• Seasonal fluctuations: Likewise, it is pointless to compare your conversion rate in a period when it is obviously exceptionally high one day and exceptionally low the next.
• Quantity: If your website hasn't had too many visitors yet, your time period for meaningful numbers should last longer.

What role does the conversion rate play in lead management?

The conversion rate, the dwell time and the bounce rate are the most important KPIs for evaluating your website. They show you whether you are providing the right content for them. Based on the CR you can find out in which phase of your funnel visitors are and what exactly you have to do now. If a website visitor, for example, downloads a whitepaper or fills out a form, then your lead magnet seems to have worked and your online appearance seems to have convinced. With the Conversion Rate you can see how many website visitors or subscribers of your Social Media channels are thrilled by your work or not. In addition, you can track their long-term interest in certain items and consider them in your content planning.

How can you improve your conversion rate?

That is the big question. There are so many variables. Often small measures can achieve great effects. These should then be analyzed again with your Conversion Rate. Some interesting facts and helpful tips can be found in the following studies.

• Positive customer reviews: According to a ConversionXL study, search results with a star rating achieve a 35 percent higher click-through rate and have a 97 percent higher chance of a better click-through rate than competitors without ratings.

• Social Proof: According to a ConversionXL study, buyers are more likely to remember you if you place testimonials with photos on your website. Logos are forgotten more quickly.

• Welcome emails: With an opening rate of 80 percent, welcome emails are, according to Thrive my way, the best advertising emails. Leave more than a 'Hello'.

• Color choice: The Restorff effect suggests the optimal color always depends on the already existing colors (of your website). If your CTAs are the only element in a certain (eye-catching) color, they immediately catch the eye.

• Text: Even the active wording can work wonders. Kissmetrics was able to increase the click rate by a whopping 93 percent by rephrasing the sentence 'Feel fresh without sweat marks' to 'Put an end to sweat marks'.

What tools are suitable for calculating the Conversion Rate?

The formula is nice and all, but a bit complicated for everyday work, isn't it? You want to know if there are tools that automatically collect and evaluate the relevant data? Of course there are - and you can find the best ones at OMR Reviews, where the most popular software solutions with verified user reviews are listed.

A tool for calculating the conversion rate can distinguish between generally visits (all sessions) and user (unique visitors). The latter excludes automatic impressions (e.g. by bots or multiple page views). This increases the meaningfulness of your conversion rate.

Since conversions play a role in almost every process, there are many different tools with which you can determine your conversion rate: All-in-One Digital Marketing Softwares, A/B Testing Platforms, Acquisition Software, Product Analytics Systems and Sales Software. They all fall into the category Conversion Optimization Tools. You should not miss these:

Conclusion: If you know your conversion rates, (almost) nothing can go wrong!

In order to create an optimal user experience, you need some data. Even small goals or sub goals (micro goals) have a big impact on the success of your website. The Conversion Rate tells you how visitors behave and what information they are really interested in. Do you want to do without this high-quality and detailed information? Probably not! So get started right away. Browse the most popular tools of the OMR Community and find your favorite software.